Trump, tariffs, and trade: Tussle between geoeconomics & geopolitics

Dr. Sudhir Kumar Das

(dasudhirk@gmail.com)

President Donald Trump has levied a punitive tax of 25% and penalties on exports from India to the US as a punishment for buying Russian oil and weapons. Recently, he has also made an announcement that he would ‘substantially raise the tariffs’ in the next twenty-four hours on Indian exports to the US. To add salt to injury, he, on his media network Truth Social, has also declared that he has concluded an agreement to explore ‘massive reserves of oil’ with Pakistan. Further, to provoke India, he predicts that there will be a time when India will import oil from Pakistan. A day later, to further humiliate India, he termed the Indian economy as dead along with that of Russia. The boorish and vile language of Trump has created a huge consternation in India (except, of course, for Rahul Gandhi, who endorses Trump’s view). The MEA has given a strong rebuttal to the allegations of the US and EU that India is financing the Ukraine war by pointing out the hypocrisy of their own trade with Russia, which is much larger in volume than India’s. According to the MEA rebuttal, even the US is continuing to trade with Russia in critical minerals while lecturing and bullying other countries to stop trading. However, a closer historical scrutiny of the Indo-US relations shows that the improved India-America relations are only a recent phenomenon which started just at the beginning of this millennium; before that, America had always played the role of an adversarial nation to the Indian interests, supporting our arch enemy Pakistan and opposing our idea of non-alignment. India has weathered many American presidents and their whimsical policies towards India in the past. Richard Nixon’s hatred for the Indians in general and Mrs Gandhi in particular during the Bangladesh Liberation War remains deeply engraved in our collective memory. He and his foreign secretary Henry Kissinger’s firm stand supporting Pakistan during the 1971 Bangladesh Liberation War has been well documented in history as one of the glaring failures of the US foreign policy in South Asia. In 1979, during the Jimmy Carter regime, the US poured dollars and defence hardware into Pakistan under the pretence of an anti-Communist campaign in Afghanistan, ignoring India’s concern that the American weapons would be used against it. In the mid-1990s Clinton spoke about Kashmir and Kosovo in the same breath as two of the most dangerous places in the world, buttressing Pakistan’s stance on Jammu and Kashmir. All through the 1990s, the US left no stone unturned in embarrassing India in every international forum on the issue of Jammu and Kashmir and human rights. It deliberately preferred to look the other way when India suffered most severely from the cross-border terrorism sponsored by Pakistan in Jammu and Kashmir. The Indo-US relations somewhat turned positive with the visit of President Bill Clinton in March 2000 after the conclusion of the Kargil Conflict in July 1999. Successive American presidents from George W. Bush to Barack Obama to Joe Biden all contributed to developing healthy Indo-US relations, realising the strategic importance of India in countering Chinese influence in Asia and the Indo-Pacific. However, President Donald Trump, by his obnoxious and boorish behaviour, has destroyed all the good work of his predecessors and has taken the Indo-US relations back to the Nixon-Kissinger era of 1971—running down India and cosying up to Pakistan. 

It is not that Trump has announced this tariff hike only against India; he has done this with every other ally and adversary equally, like Canada, Australia, the EU, Brazil, and other Latin American states. But in the case of China, its main adversary, Trump has backtracked as China threatened to stop rare earth exports, affecting a number of industries there. Trump’s assertion is that all countries have been taking advantage of America’s liberal trade policy, and by imposing tariffs he is safeguarding American trade interests, oblivious of the fact that the enhanced tariffs are ultimately to be paid by the American consumers, which will hurt them hard. On the other hand, the exporting countries cannot ignore the huge and lucrative American market. That is why there is a race to conclude trade deals with America, even under some arm twisting. He forced Japan to promise an investment of $500 billion in the US before concluding the trade deal with it. Similarly, South Korea is coerced to promise an investment of $350 billion in the US. To the chagrin of Trump, India did not offer any such investment; on the contrary, many American tech companies like Apple are keen to invest hugely in India, which he wants to come to America. He is pressurising Tim Cook not to invest in the proposed $500 billion investment in India. Why is Trump so displeased with India? The first palpable reason is that India did not give him the credit for brokering peace between India and Pakistan after the May 2025 conflict, which the latter did with the alacrity of a sycophant bowing before him by nominating him for the Nobel Peace Prize. An emperor expects such compliance from his followers, not defiance as India did, hence the anger. Secondly, by coercing India, he wants it to open its agriculture, dairy, and retail sectors to the US. India has a compulsion that if it opens up these sectors to the US, it will sound the death knell for Indian farmers and small retailers. This non-compliance has further angered Trump. India is too big a country to be a subservient ally of the US like Pakistan is, as President Trump expects it to be. Thirdly, India is an important member of the BRICS, which is perceived as an anti-West organisation formed to challenge the Western dominance in matters of geopolitics and geo-economics. BRICS threatens to end the dominance of the dollar in international transactions. Fourth, from the very beginning of the Russia-Ukraine War, India has maintained a firm neutral stance without towing the US line. This has caused a lot of consternation in the US administration. Buying Russian oil is only an alibi to punish India. China is the biggest buyer of Russian oil and weapons, along with Turkey and the European Union. Trump has let them off with lighter tariff rates. This shows the American hypocrisy.

After Prime Minister Modi’s visit to the US in February, the bonhomie between the two leaders signalled a new phase in Indo-US relations. However, with the announcement of Trump’s tariff war, those hopes got evaporated. A few of the actions of Trump with regard to Pakistan raised eyebrows in India. In the midst of the India-Pakistan conflict, the IMF granted a tranche of a $1 billion loan to Pakistan. This could not have been done without the blessings of the US administration. Soon after Operation Sindoor, Trump invited the Pakistani Field Marshal Aseem Munir, perceived in India as the architect of the Pahalgam terror attack, to lunch in the White House, ignoring India’s sensitivities. When he declared enhanced tariffs on Indian exports, in the same breath, he also announced an oil deal with Pakistan to poke India. He repeatedly claimed to have mediated a ceasefire between India and Pakistan, which India rejected vehemently. Trump’s family struck a deal with Pakistan in cryptocurrency, which is looked at in India as the reason for Trump’s increasing inclination towards Pakistan. He is increasingly perceived in India as an American president more inclined towards Pakistan and is bent upon rehyphenating India and Pakistan in US foreign policy.

Geopolitics apart, considered from a geoeconomics point of view, the US has been the largest trading partner of India for the last four years continuously. The volume of trade approximately stands at $129.2 billion. Out of which US exports to India stand at $41.8 billion and India’s exports to the US stand at $87.4 billion, a trade deficit of $45.7 billion, which the US is now trying to balance by selling more to India. India exports a wide range of goods to the US, like pharmaceuticals, gems and jewellery, electronics and electrical equipment, textiles and apparel, and petroleum products. Other significant exports include engineering goods, organic chemicals, basmati rice, and handicrafts. By Trump’s enhanced tariff announcement, these sectors will be adversely affected. India must have to think out of the box to bring about a balance between geo-economics and geopolitics in the context of Trump’s tariff war.

Geopolitics is constantly in a state of flux. Mercurial Trump’s unpredictable acts may drive India into a new anti-West geopolitical triumvirate of Russia-China-India. In that case, Trump’s strategy of weaponising trade and tariffs as a geopolitical objective may backfire, and when push comes to a shove, the US may lose India irretrievably as an ally in Asia.